Biotech's breathless quarter of IPOs brings in $2.1B for R&D

Back in January, at the annual J.P. Morgan Healthcare Conference, across hotel lobbies and crowded hallways and standing-room-only cafes, one could hardly escape talk about the biotech IPO boom. More than 45 life sciences companies had made their way onto the public markets in the preceding year, banking more than $3 billion in the process, and many at the industry's annual sewing circle believed biotech was about to see its shadow on Wall Street. Furthermore, rumor had it at least 25 upstarts were already embarking on road shows and wooing underwriters, all looking to squeeze out of a shrinking window before it snapped shut and burst the biotech bubble in the process.

But then that's not quite how things turned out.

Instead, a galling 29 life sciences outfits went public in the first quarter, taking home $2.1 billion to fund high-tech gene silencing, me-too pain drugs and what might boil down to a gussied-up formulation of plain old bleach, to name just three.

Not every member of the class of 2014 made a stellar debut, of course, and alongside high-fliers like Ultragenyx ($RARE) and Auspex came shakier offerings from Nephrogenex ($NRX) and Dipexium Pharmaceuticals ($DPRX). (The letter X was a running motif.) But, in sum, the whole group finished the quarter up about 36%, weathering a March downturn spurred by drug pricing concerns for big-timers like Gilead Sciences ($GILD) that trickled down to weaken the industry index.

Still, despite all the fresh cash and cautious optimism, the first quarter's boom didn't really assuage fears that biotech is in the midst of a bubble ready to burst; it simply deferred them.

No one expects Q1's pace to continue for the full year, and the aligning stars that helped so many biotechs win the favor of investors could turn around and make the industry a victim of its own success. Well-performing stocks and bullish public markets have helped pushed valuations ever higher for drug developers, creating something of a vicious cycle that could disincentivize the Big Pharma buyouts investors crave when they invest in biotechs to begin with. Thus, in a worst-case scenario, the IPO boom could desiccate the M&A market, thus undercutting Wall Street's interest and bursting the bubble.

But that's a problem for another day. For now, 29 biotech upstarts are hitting the gas on projects to, for example, fight cancer, treat inflammation, combat rare diseases and restore vision. The patient angle is often lost in discussions of dollars and deals, and while the well-cited 90% attrition rate for drug development will certainly apply to the latest crop of IPO success stories, $2.1 billion can pay for a lot of tries.

January

Scoop: After a few fits and starts halted its attempts to go public in 2013, GlycoMimetics finally made its way to Wall Street and kicked off the new year's IPOs in the process. The company said it would spend the lion's share of its haul on GMI-1271, an early-stage treatment for acute myeloid leukemia, and put the rest toward preclinical R&D and corporate expenses. GlycoMimetics' furthest-along candidate is the Phase III-ready GMI-1070, treating rare vaso-occlusive crises, and the biotech has licensed that drug's worldwide rights to partner Pfizer ($PFE) in exchange for up to $340 million in milestones.

Scoop: Like GlycoMimetics, Celladon was a would-be 2013 entrant that had to regroup before pulling off a public debut. The 2012 Fierce 15 member plans to spend its raise getting its heart failure gene therapy, dubbed Mydicar, through a Phase IIb study and into late-stage development. Celladon expects to read out Phase III data in systolic heart failure in 2015, and the biotech is in the midst of early-phase studies of Mydicar in advanced heart failure, diastolic heart failure and pulmonary arterial hypertension. The drug works by inserting the SERCA2a enzyme into patients' heart cells, thus boosting cardiac muscle contractions to improve heart function.

Scoop: Dicerna's high-flying debut helped convince more than a few market watchers that 2013's biotech boom had legs in the new year, as the Massachusetts biotech hit the Street well above its range and more than doubled in its first day of trading. The company plans to use its raise to get its cancer-fighting RNAi treatment DCR-M1711 into clinical trials in patients with a variety of tumor types. Next is DCR-PH1, which targets a rare inherited liver condition tied to severe renal disease and early death, and Dicerna expects to get that RNAi drug into the clinic next year.

Ultragenyx pulled off the best yield of any first-quarter biotech debutante, as the 2013 Fierce 15 honoree has soared since selling 5.8 million above its initial range. The biotech plans to put its newfound cash toward its four mid-stage rare disease programs: KRN23, designed to treat the rare disease X-linked hypophosphatemia; triheptanoin, which Ultragenyx is developing for patients with long-chain fatty acid oxidation disorders and those with glucose transporter type-1 deficiency syndrome; and SA-ER, which targets the muscle-destroying hereditary inclusion body myopathy.

Scoop: Cara is creeping up on Phase III for its top candidate, CR845 to treat acute postoperative pain, and it convinced investors to buy up 5 million shares and pay its way into late-stage development. The intravenous drug works by selectively targeting kappa opioid receptors, and it charted promising safety and efficacy results across three Phase II studies, according to Cara. The biotech is planning to kick off Phase III in the second half of this year, meanwhile working up an oral formulation of CR845 and a preclinical drug for neuropathic and inflammatory pain.

Scoop: After postponing a planned fall IPO, Trevena limped out onto the public markets with a discounted offering to advance its late-stage heart failure drug. Getting top billing at Trevena is TRV027, a Phase IIb treatment that targets G protein-coupled receptors to reduce blood pressure and improve outcomes for patients with acute heart failure. Forest Laboratories has a licensing right to the drug, and Trevena expects to report Phase IIb data next year and commence Phase III work thereafter. Rounding out the biotech's pipeline are TRV130, an intravenous postoperative pain treatment; TRV734, an oral chronic pain med; and an unnamed preclinical compound with applications in Parkinson's disease, depression and pain, according to Trevena.

February

Scoop: The Netherlands' uniQure, a 2013 Fierce 15 honoree, won the first-ever Western approval for a gene therapy when the European Commission OK'd Glybera for lipoprotein lipase deficiency in 2012, and the company plans to spend a chunk of its raise gearing up for a first-half launch of that drug. In addition, the biotech plans to get the hemophilia B-treating AMT-060 into a Phase I/II trial with the help of collaborator Chiesi.

Scoop: Auspex's lead candidate is SD-809, a VMAT-2 inhibitor for movement disorders, and Auspex is in the midst of a Phase III study on abnormal involuntary movements associated with Huntington's disease, planning to file with the FDA this year for a potential 2015 launch. At the same time, Auspex is plotting a Phase IIb trial of the drug in tardive dyskinesia and is soon to launch a Phase Ib study to see whether SD-809 can treat tics associated with Tourette syndrome.

Scoop: The 2008 Fierce 15 company is developing two early-stage T-cell vaccines for herpes and all strains of the bacteria pneumococcus. Genocea kicked off a Phase I study for the latter late last year, touting its vaccine as more comprehensive than Pfizer's ($PFE) blockbuster Prevnar 13. The promise of Genocea's pipeline was convincing enough to win the support of some major players, and the company's most recent funding round, a $30 million Series C, attracted the Bill & Melinda Gates Foundation, Johnson & Johnson's ($JNJ) investment arm and Polaris Venture Partners.

Scoop: Egalet raised $50 million of its own in a $12-per-share offering that priced right at its proposed midpoint. The company is developing abuse-resistant opioid pain pills, and its chief candidate, Egalet-001, is an oral morphine formulation that should be NDA-ready by year's end, according to Egalet. Its second drug is an abuse-discouraging oxycodone that's slated for Phase III this year with an FDA filing planned for 2016.

Scoop: Revance cleared $96 million with its $16-a-share debut, pricing at the top of its range and commanding a $284 million market cap. The biotech's lead candidate is RT001, a Phase III Botox successor designed to ease crow's feet without the need for injections. The drug proved effective in a Phase II trial back in 2010, and its promise helped Revance close a $33 million Series E last year. Rounding out the company's pipeline is RT002, a Phase I injectable formulation of botulinum toxin type A with hopes of smoothing out frown lines.

Scoop: The Third Rock Ventures-backed Eleven priced below its range at $10 a share, recouping $50 million to advance its ophthalmic drugs. Leading the way is EBI-005, a topical interleukin-1 receptor antagonist designed to treat ocular inflammation. This quarter, Eleven plans to kick off a Phase III trial on the drug in dry eye disease and a Phase II study in allergic conjunctivitis, and the biotech is in preclinical stages with injections for diabetic macular edema and uveitis. The company takes its name from Spinal Tap guitarist Nigel Tufnel's senselessly numbered amplifier, reflecting what CEO Abbie Celniker said is Eleven's ambition to "crank up" biologics development.

Scoop: Argos priced well below its planned $13 to $15 range and hauled in less than the $60 million it once sought, but despite the downsize, Argos said the cash infusion will help it get lead candidate AGS-003 through a Phase III trial in patients with renal cell carcinoma. The drug uses a patient's own dendritic cells to fight cancer growth, harvesting white blood cells to craft a personalized immunotherapy and then reinjecting it. In a Phase II study pairing AGS-003 with Pfizer's ($PFE) sunitinib, the combo clocked a median overall survival of 30.2 months, compared to 14.7 months for sunitinib alone, and Argos is looking to duplicate those results in its late-stage program.

Scoop: After a few delays, NephroGenex put up 3.1 million shares at the low end of its range. The biotech is developing Pyridorin (pyridoxamine dihydrochloride) as a treatment for diabetic nephropathy, a progressive kidney disease, and the company plans to use its IPO haul to fund late-stage studies of the drug. NephroGenex plans to kick off its Phase III program in the first half of the year, and it has recruited CRO Medpace and the nephrology-focused Collaborative Study Group to help it get the treatment to market.

Scoop: Flexion priced right in the middle of its range, and the biotech expects its haul to fund late-stage studies for a pipeline of pain drugs. Leading the way is the sustained-release steroid FX006, a Phase III-ready treatment for osteoarthritis pain, followed by the Phase II FX005 for end-stage osteoarthritis and the preclinical FX007 for postoperative pain.

Scoop: Eagle Pharmaceuticals priced in the middle of its expectations and plans to put its money toward developing improved versions of successful injectables. Eagle has already submitted for FDA approval the drug EP-3101, a spin on Teva's ($TEVA) hematologic cancer treatment Treanda, and it's in the midst of late-stage studies for a shorter infusion time formulation of the same drug. The company already has two approved products and another four "me-better" treatments in development.

Scoop: Concert priced at the low end of its range after boosting the size of its offering by 20%, and the biotech plans to use the lion's share of its raise to fund the development of CTP-354, a novel treatment for spasticity in patients with multiple sclerosis or spinal cord injury. Concert expects to kick off Phase II trials for the drug in the second half of this year, looking to follow up on some promise from a 71-patient Phase I study. Rounding out Concert's pipeline is CTP-499, a Phase II treatment for Type 2 diabetic kidney disease, another drug for psychiatric disorders partnered with Avanir Pharmaceuticals ($AVNR), an inflammatory disease treatment developed alongside Celgene ($CELG) and a narcolepsy therapy licensed to Jazz Pharmaceuticals ($JAZZ).

March

Scoop: Aquinox priced at the midpoint of its range but dialed up its offering by about 14% to help fund its pipeline of treatments for inflammation and cancer. The biotech's lead candidate, AQX-1125, is a Phase II PI3K-targeting drug with applications in COPD and other chronic inflammatory ailments. The company also has some preclinical assets that modulate PI3K to treat cancer. In April, the Canadian outfit picked up $18 million in venture cash to fund AQX-1125's mid-stage development, with the venture arms of Johnson & Johnson ($JNJ) and Pfizer ($PFE) among its benefactors.

Scoop: Recro had to dial down its asking price and pump up its offering on a long road to Wall Street, but the company finally sold off 3.8 million shares at $8 apiece. With the cash, the 5-person drug developer plans to focus on Dex-IN, an intranasal formulation of the nonopioid pain treatment dexmedetomidine. The drug performed well in a Phase I study on patients with chronic lower back pain, according to the company, and Recro is gearing up for a Phase IIb trial targeting postoperative pain, figuring its IPO raise will get the drug all the way through to manufacturing. Beyond Dex-IN, Recro is developing a sublingual version of the same active ingredient plus fadolmidine, another alpha-2 agonist with potential in neuropathic pain.

Scoop: Achaogen priced at the low end of its range, flipping 6 million shares to hit the gas on its portfolio of antibiotics. Leading the way is plazomicin, a Phase III treatment designed to treat drug-resistant forms of gram-negative bacteria. The biotech plans to report out an interim analysis of the trial next year with top-line data expected in 2017. Beyond plazomicin, Achaogen is developing a small-molecule LpxC inhibitor and a therapeutic antibody, both preclinical efforts to attack infections caused by Pseudomonas aeruginosa.

Scoop: Galmed managed to ship out 2.8 million shares after upping its tender by 17%. The company's lead drug, aramchol, is a synthetic combination of fatty acid and bile designed to treat nonalcoholic steatohepatitis (NASH), one of the industry's en vogue disease targets. Galmed is working through a mid-stage study of the drug in NASH patients with obesity and glucose intolerance, planning to roll aramchol into Phase III in 2015.

Based: New York CityRaised: $33 millionIPO price: $12Close April 1: $10.41Change: Down 13%

Scoop: Dipexium hit Wall Street by selling 2.8 million shares at $12 each, hitting the low end of its expected range. The company is developing Locilex, a Phase III antibiotic cream designed to treat skin infections in diabetic foot ulcers. The biotech believes its candidate also shows progress in more serious bacterial infections, including MRSA. Dipexium is in the midst of discussions with the FDA to get started on two parallel late-stage studies with eyes on eventual approval, the company said.

Scoop: With the proceeds of its 5.2-million-share offering, the cancer-focused Ignyta hopes to push its lead candidate, the tyrosine kinase inhibitor RXDX-101, into a mid-stage study. In preliminary Phase I results released last month, Ignyta's drug showed no dose-limiting toxicities and came through with promising signs of antitumor activity, the company said.

Scoop: Stoking the hopes of European biotechs watching the U.S. IPO boom from across the Atlantic, the allergy specialists at Circassia made a splash with their debut on the London Stock Exchange, banking an up-sized haul to get a pipeline of immunotherapies to the market. The company's lead program is Cat-SPIRE, a Phase III vaccine employing synthetically produced peptides that can train the immune system to gradually get over a cat allergy. In addition to its cat candidate, the company has a fleet of Phase II vaccines for house dust mites, grass and ragweed, all of which promise to improve symptoms after just a four-dose course of treatment.

Scoop: After initially setting out to raise $75 million, Akebia upped its offering by 20% to 5.9 million shares before pricing at the top of its range. With the raise, Akebia plans to accelerate the development of AKB-6548, a once-a-day oral anemia drug. The treatment is working through a Phase IIb trial in patients with anemia secondary to chronic kidney disease, and Akebia figures its newfound funding will get the drug into Phase III in that indication and pay for a Phase II study in idiopathic anemia of aging.

Scoop: Israeli outfit MediWound hit the Street at the low end of its range, dishing out 5 million shares to fund Phase III trials for its topical burn treatment, NexoBrid. The gel is already available in Europe as a wound-clearing solution for thermal burns, and the biotech is working through a mid-stage trial of the drug for chronic wounds and a preclinical program in connective tissue diseases.

Scoop: Just a month after raising $55 million in Series E cash, Versartis pulled off the quarter's biggest U.S. IPO, moving 6 million shares at $21 each through an up-sized offering at the top of its range. With its combined $181 million, Versartis plans to pay its way through a Phase III study for VRS-317, a long-acting recombinant human growth hormone designed to treat HGH deficiency. Right now, the standard of care is a series of inconvenient daily injections, the company said, and Versartis figures it can win approval for VRS-317 and grab a major share of the roughly $3 billion market for HGH deficiency treatments, all without the need for a deep-pocketed partner.

Scoop: After months of stop-and-start efforts, little-known Ruthigen pulled off a down-sized and discounted IPO to help get its pharmaceutical-grade formulation of hypochlorous acid into clinical trials. The biotech's sole program is RUT58-60, an anti-infective Ruthigen believes can come in handy in abdominal, cardiac and orthopedic surgeries. The company, formerly a subsidiary of medical device outfit Oculus Innovative Sciences, says its treatment has the potential to cut down on hospital-borne infections and thus reduce readmission rates and save money for patients and payers alike.

Scoop: Gene therapy upstart Applied Genetic Technologies is looking to get its candidates out of animals and into the clinic, selling about 4.2 million shares below its hoped-for range to do so. With its new $50 million, AGTC is looking to progress treatments for X-linked retinoschisis, an inherited retinal disease; achromatopsia, a hereditary eye ailment that mars vision; and X-linked retinitis pigmentosa, a genetic mutation that gradually leads to blindness. The biotech plans to start a Phase I trial for its top candidate in the second half of this year, following suit for its achromatopsia treatment in 2015.